KUALA LUMPUR, Sept 30 — Malaysia scored 48.6 in the Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) in the third quarter this year, marking a slower pace deterioration compared to August’s scoring of 47.4.

The Nikkei Malaysia Manufacturing PMI report released today also noted that production decrease in September was at joint lowest since October last year.

"The headline PMI posted 48.6 in September, up from 47.4 in August, signalling a weaker deterioration in operating conditions at Malaysian manufacturers,” the report said.

"Moreover, the latest figure was the highest since January 2016 and greater than the average over the current 18-month sequence of readings below the 50.0 no-change mark.”

PMI figures above 50.0 indicates overall improvement of sector operating conditions, while below 50.0 marks contraction.

The report noted, however, that despite the improved performance, purchasing fell at a sharper pace while international demand also dropped at the fastest rate in three months.

Input price inflation also rose to the joint-strongest in the series history to date, with 17 per cent of monitored companies recording an increase in input prices compared to less than 1 per cent that noted a contraction, according to the report.

"Latest survey data signalled a weaker deterioration in operating conditions at Malaysian manufacturers. Both production and new orders declined at softer rates, with the latter falling at the slowest pace since May 2015. Meanwhile new exports decreased at the sharpest pace in three months, linked by panellists to an unstable global  economy and a lack of demand from foreign clients,” said Amy Brownbill, Economist at IHS Markit, which compiles the survey.

"On the price front, input prices rose at the sharpest rate in nearly three years in September. This corresponds with an IHS Markit forecast for producer prices to increase by 1.1 per cent m/m, which would be the highest reading in 33 months. According to the survey panel, unfavourable exchange rates, the sales tax increase and higher raw material prices led to greater cost burdens.”

The report also noted that employment in manufacturing has broadly stabilised in September after having declined in the previous two months.